COMMISSIONER OF INCOME-TAX vs. IQBALBHAI I MANSURI (DECD.)

ITR/38/1988HC GujaratGJHC24013115198803 September 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
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What did the High Court hold?

The High Court held that the order of the Commissioner of Income-tax passed under Section 263 of the Income-tax Act, 1961, was rightly set aside by the Tribunal. The Court's decision was based on its prior judgment dated September 12, 2001, in Income-tax Reference Nos. 131 and 294 of 1987, which arose from the same consolidated order of the Tribunal that the Tribunal had relied upon in the present case. The ratio decidendi is that if the Tribunal's prior consolidated order, which dealt with the same issue for the same assessee and others, was upheld or followed by the High Court, then subsequent references dealing with the same issue, relying on that consolidated order, should also be decided in line with the High Court's previous decision. The Court answered the reference in the affirmative, in favour of the assessee and against the revenue. The operative direction was to answer the question in favour of the assessee.

What were the facts?

The assessee, Iqbalbhai I Mansuri (deceased), had a 25% share in a firm, M/s Graduate Pickers Works. He settled this share in trust on October 21, 1974. From assessment year 1975-76 onwards, the assessee did not include his share of income from this firm in his total income, filing separate returns for the trust and beneficiaries. The Income Tax Officer (ITO) and Appellate Assistant Commissioner (AAC) initially disagreed with the assessee's stance. However, the Income Tax Appellate Tribunal (ITAT) accepted the assessee's contention in prior appeals up to assessment year 1980-81. For the assessment year 1981-82, the ITO did not include the share income. The Commissioner of Income-tax (CIT) invoked Section 263 of the Income-tax Act, 1961, directing the ITO to include the share income. The assessee appealed to the ITAT, which set aside the CIT's order, relying on its prior consolidated order.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the order of the Commissioner of Income-tax passed under section 263 of the Income-tax Act, 1961, was rightly set aside by the Tribunal? (Question of law) Assessee's contentions: The judgment does not record any specific contentions made by the assessee. However, the fact that the Tribunal set aside the CIT's order implies the assessee's arguments before the Tribunal were successful. Revenue's contentions: The revenue, through its counsel Mr. Akil Kureshi, argued that the CIT's order under Section 263 was justified and that the Tribunal erred in setting it aside. The revenue's position was that the share income from the firm should have been included in the assessee's total income. The revenue relied on the fact that the ITO and AAC had previously taken a contrary view in earlier assessment years.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 38 of 1988

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO -----------------------------------------

The order continues below.

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